Hulamin 2017 sales hit record high, but earnings hampered by stronger US dollar

South African aluminum supplier and exporter, Hulamin, on Monday reported record sales of 233,000 tons for the year ended 31 December 2017, despite challenging local market conditions.

Hulamin said manufacturing output benefited from a continued and consistent focus on lean manufacturing, while cost reduction initiatives, higher volumes, improved efficiencies and a substantial metal price lag benefit largely compensated for the reduction in rand rolling margin, driven by the stronger currency.

But local demand was particularly subdued, driven by the fall-off in fixed capital investment.

Hulamin chief executive, Richard Jacob, pointed to manufacturing excellence as the main driver of record sales.

“We report another year of record sales and improved manufacturing performance following the previous record set in 2016, against a backdrop of continuing tough market conditions and a stronger Rand,” Jacob said.

“This was achieved through an ongoing focus on manufacturing excellence with a specific emphasis on cost reduction and tight capital discipline. This resulted in a second consecutive year of strong cash flows and a further reduction in borrowings.”

Earnings before interest and taxation (EBIT) declined by 13 percent to R538 million, and decreased by 16 percent to R517 million on a comparable basis, after adjusting for a R25 million insurance receipt in 2017. Headline earnings per share were down 13 percent due to the stronger rand.

The group declared a final dividend of 15 cents per share for 2017, the same as the previous year.

Hulamin said it continued to make efforts to maintain the improved sales and manufacturing performance in 2018 with further initiatives to improve rolling margins through focusing on a higher margin product mix are gaining momentum.